Downward trend stopped – Metro Cash & Carry Germany Drives Turnaround

18 June 2010

  • Earnings target of € 150 million by 2012 confirmed
  • Extensive investment programme of around € 100 million
  • Portfolio optimisation with disposal of four stores
  • Integration of C+C Schaper
  • Further innovations for more customer proximity

Metro Cash & Carry Germany has stopped the downward trend: One year after the start of the turnaround programme the company is showing first positive results and thereby strengthening the basis for a return to long-term, profitable growth. One important element of the group-wide efficiency and value enhancement programme Shape 2012 continues to be the target of increasing earnings to around € 150 million by 2012. The turnaround of Metro Cash & Carry Germany is strengthened by a growth offensive. In the framework of an extensive investment programme numerous stores will be modernised, further innovative concepts implemented and the store portfolio as well as the administrative structures optimised. 

"The turnaround programme is showing first positive effects – on the cost side and on the sales side", said Joël Saveuse, Member of the Management Board of METRO GROUP and Europe-CEO of Metro Cash & Carry. Overall, the positive trend of the first quarter continued to stabilise. The self-service wholesale operator reported a gratifying growth in sales, especially in important core assortments such as meat, fish and catering supplies. At the same time, the selling and general administrative expenses were reduced further. 

Also the improved price positioning and the relaunch of the private label assortment are beginning to show positive effects. Within one year, the sales share of private labels in total increased from 15 to now 17 percent. The target is to extend the share of private labels to well over 20 percent in the medium term. In addition, attractive seasonal products round off the offering in non-food. 

The turnaround programme covers more than 200 individual measures. "It is our intention to further accelerate the implementation of these measures in the coming months", said John Rix, CEO of Metro Cash & Carry Germany. To this effect, the company focuses on three core targets: 

Growth offensive and portfolio optimisation

The central elements of the growth offensive are the largest investment programme in the history of the company as well as an extensive optimisation of the store base: "We plan to modernise nine cash & carry stores in 2010. Three other stores are to be relocated to new buildings", according to John Rix. "For these measures alone we will invest around € 100 million". 

Furthermore, based on an extensive store analysis Metro Cash & Carry Germany also decided to close the wholesale stores in Halle, Berlin-Pankow and Berlin-Marzahn as per 31 October 2010 – subject to approval by the responsible supervisory board. Moreover, the store in Rostock is to be divested. "Regarding stores with critical financials we did everything possible to render them profitable. In this process, we could unfortunately not find any perspective for these four locations", said Rix. "This decision was not easy but there was no alternative with a view to a sustainable and accelerated restructuring". 

For the store modernisation numerous findings from the existing five concept stores will be implemented. Over the last year new innovative sales and service concepts have been tested here. Especially the food assortment measures taken at these stores had a positive effect. The concept stores show an above average development in dealing with HoReCa customers and traders, supported by the intensified customer approach through additional key account managers. The adjustments in non-food in the concept stores have to some extent gone too far. Further adjustments will be made in this area, in particular with regard to seasonal products. Overall innovations will continue to be tested in the five concept stores. 

Metro Cash & Carry Germany will also specifically extend the delivery service launched in 2009. During the past year the company's new delivery service generated € 100 million in sales and a positive earnings contribution. A further increase in delivery sales is planned for 2010. In the first quarter, the company succeeded in significantly increasing its sales in this area. Supported by modern IT systems, more than 300 employees contribute to rendering the processes customer-centric and efficient. In this context and against the backdrop of the large demand, it is, amongst other things, planned to soon convert the store in Weiterstadt to a regional delivery hub for the Rhine-Main area. 

Restructuring

Subject to approval by the responsible boards C+C Schaper and Metro Cash & Carry Germany will be merged as from January 2011. The headquarters of C+C Schaper in Hanover will be closed down. In the framework of a two-brand strategy the stores will continue to operate under the present brand names. Together, the two companies can better leverage their potentials, e.g. in attracting key accounts. 

In the framework of the portfolio optimisation and the integration of C+C Schaper a total of around 900 jobs will be cut. This will be done in a socially responsible manner. With a view to an improved customer orientation the company is at the same time also enlarging its workforce in growth areas – these include key account management, delivery services as well as expert advisors for catering and wine. 

Innovations

To better distinguish itself from the competition, Metro Cash & Carry Germany is further working on cutting-edge concepts. One example is the new fish platform that will be opened in Frankfurt am Main in the autumn. This modern logistics hub is to ensure that customers can in future be offered even more freshness and quality in fresh fish. The self-service wholesale operator intends to achieve similar improvements by increasingly using the international platform in Valencia to source fruit and vegetables. Plans also include the rollout of the first "drive-in concept" in German wholesale through C+C Schaper in Singen and Lahr. 

"We are convinced that, with these measures, we will be able to successfully continue on the road taken and achieve the ambitious targets set for Metro Cash & Carry Germany", said John Rix.  

With more than 15,000 employees, Metro Cash & Carry operates 61 wholesale stores in Germany. More than 3.35 million customers rely on the assortment and services of the company which, at the international level, is active in 29 countries with 655 stores. METRO GROUP is one of the most important international retailing companies. In 2009 the Group reached sales of € 66 billion. The company has a headcount of some 300,000 employees and operates around 2,100 stores in 33 countries. The Group's performance is based on the strength of its sales divisions which operate independently in their respective market segment: Metro/Makro Cash & Carry – the international leader in self-service wholesale, Real hypermarkets, Media Markt and Saturn – European market leader in consumer electronics retailing, and Galeria Kaufhof department stores.